Margaret Moran, the former Labour MP, has been ruled "unfit to plead" to charges of falsely claiming £80,000 in expenses and will not face trial.

The 56-year-old is suffering from severe depressive mental illness and extreme anxiety and agitation due to the stress of legal proceedings and issues in her childhood, a court was told.

She also suffered feelings of abandonment by the Labour party, and intense shame that her parliamentary career was over.

Consultant psychiatrist Philip Joseph told the court that Moran was unable to deal with the case against her. "Her response has been: 'I just want to plead guilty, be punished and get it out of the way'," But, he said, this was due to her feelings of "hopelessness and worthlessness".

"She feels she is being punished for past mistakes, not to do with expenses, but in her childhood and adolescence.

"There is a severe risk of her just saying she is pleading guilty for the wrong reasons."

A far cry from the "exuberant personality" she once was, she now spends her days "walking the dog, doing some cooking, and watching TV," Joseph told Lewes crown court.

Judge Mr Justice Saunders said three psychiatrists agreed "she is suffering from a depressive illness which is properly described as a mental illness," and was not in a fit state to instruct lawyers, follow proceedings, or give evidence.

Delivering his ruling, Saunders said: "While it may be that this result will be viewed with scepticism by some, it should be understood that courts act on evidence."

The case will now be adjourned for a jury to determine whether Moran did the acts alleged by the prosecution. She was not present in court.

Moran, who held Luton South from 1997 until stepping down in 2010 in the wake of the expenses scandal, faced 21 charges, 15 of false accounting and six of using false instrument in relation to parliamentary expenses between November 2004 and August 2008.

Giving evidence during the one-hour hearing, Joseph said he had examined Moran, who was living with her long-term partner in Southampton, in October last year.

He said her depression was moderate when she was just sitting quietly at home, "but as soon as the case is brought to her attention it becomes more severe".

Asked by Moran's barrister, Jim Sturman, QC, if she could be exaggerating, Joseph said there was always that possibility, but that he believed her symptoms were genuine.

He said the illness meant a lot of things from the past were coming back to haunt her and she felt "she was being punished for past issues in her childhood".

"All this crushing down and the feeling of public shame and vilification has caused her, in my words, to become a broken woman, because all that she had used to sustain her, her parliamentary career, has come crashing down."

He added: "A lot of her activities as an adult have been to compensate for difficulties and adversity she experienced during childhood." It was no surprise, he said, that she had had a "catastrophic reaction" to the proceedings.

Moran is undergoing cognitive behavioural therapy, and receiving psychiatric treatment. Asked for a prognosis, Joseph said: "The depression persists as long as these proceedings persist."

She had a genetic vulnerability to depression, he said, which could explain why her reaction to court proceedings was "far beyond normal".

Louis Mably, QC, for the prosecution, said it was agreed Moran was unfit to plead after examination by three expert psychiatrists.

Delivering his judgment, Saunders said: "It may not be surprising that these proceedings and the end of her parliamentary career would cause considerable upset to Mrs Moran.

"However, the psychiatrists have concluded that at the time she was mentally fragile because of her genetic history and episodes in her past, which she had been able to keep submerged while she lived a busy and exciting life as an MP but had now come to the surface."

He added: "She is likely always to remain susceptible to relapse and the symptoms she presently has are unlikely to resolve for some considerable period of time after these proceedings are concluded".

The judgment continued that all the psychiatrists agreed she was not able to give proper instructions to her lawyers. "[Dr Joseph] recorded her as saying 'I just want to plead guilty and be punished' but in his view and my judgement, that is unlikely to have been a response reached after a proper consideration of the allegations and is simply an attempt to get the matter over with and assuage feelings of guilt which may relate to other matters.

"In those circumstances, as the evidence is all one way and the application is not opposed, I find on the balance of probabilities that the defendant is under a disability and is unfit to plead."

A trial on the issues will be held in November.

Moran is alleged to have "flipped" her designated second home, claiming for properties in London, Luton and Southampton, dishonestly claiming £22,500 to repair dry rot in the latter. She is also accused of falsely claiming for boiler repairs and work on her conservatory.